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- You can invest in a portfolio of two assets: the riskfree asset with rate of return 6%, and a risky portfolio with expcected return 16% and stdev 30%. You optimally choose to invest equal amount in both assets. What is your risk aversion (keep 2 decimal places)? A=Give typing answer with explanation and conclusion Assume that your client would prefer to invest her entire wealth into a portfolio with an annual risk premium of 6% and a standard deviation of 12%. You have constructed a risky portfolio with an expected return of 10% and a standard deviation of 15%. T-Bills are currently yielding 4%. What is the optimal allocation, y, to the risky portfolio given your client's risk preferences? What is the expected return and standard deviation on your client's optimal complete portfolio?Assume that there is a portfolio with an E(r) =20% and σ = 30%. Also, the risk-free rate of return on T-Bills is 7%. If you are a risk-averse investor with degree of risk aversion A=4 would you invest in the risky portfolio or in the risk free asset? And what if your A=2? Assume that there is a portfolio with an E(r) =20% and σ = 30%. Also, the risk-free rate of return on T-Bills is 7%. If you are a risk-averse investor with degree of risk aversion A=4 would you invest in the risky portfolio or in the risk free asset? And what if your A=2?
- from the table below. Assuming the risk- free rate is 5%. A. Choose the best portfolio according to the Sharpe measure with explanation. B. Choose the best portfolio according to the Treynor measure with explanation. C. Choose the best portfolio according to the Jensen measure with explanation. Portfolio A 0.1 0.1 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.18 0.16 0.18 0.17 0.18 0.18 0.18 0.18 0.17 0.17 0.18 Portfolio B 0.12 0.12 0.16 0.2 0.14 0.16 0.17 0.14 0.18 0.2 0.18 0.16 0.17 0.2 0.22 0.22 0.18 0.2 0.24 0.24 Mraket M 0.09 0.09 0.1 0.1 0.11 0.11 0.11 0.12 0.12 0.13 0.12 0.14 0.12 0.14 0.13 0.13 0.13 0.14 0.14 0.13Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 8%, op = 15%, rf = 2%. Required: a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 8%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? b. What will be the standard deviation of the rate of return on her portfolio? c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse? Complete this question by entering your answers in the tabs below. Required A Required B Required C Risky portfolio Risk-free asset Answer is complete but not entirely correct. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall…The risk free rate is 3%. The optimal risky portfolio has an expected return of 9% and standarddeviation of 20%. Answer the following questions.a) Assume the utility function of an investor is U = E(r) − 0.5Aσ2. What is condition ofA to make the investors prefer the optimal risky portfolio than the risk free asset? b) Assume the utility function of an investor is U = E(r) − 2.5σ2. What is the expectedreturn and standard deviation of the investor’s optimal complete portfolio?
- Assume an investor with the coefficient of risk aversion A=5.5. To maximize her expected utility, she would choose the asset with an expected rate of return of _______ and a standard deviation of ________, respectively." a. 21%; 16% b. 24%; 21% c. 12%; 30% d. 15%; 5%Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 9%, Op = 24%, rf = 2%. Required: a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 8%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? b. What will be the standard deviation of the rate of return on her portfolio? c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse?You can invest in a portfolio of two assets: the riskfree asset with rate of return 10%, and a risky portfolio with expected return 14% and stdev 35%. You optimally choose to invest equal amount in the two assets. What is your utility?
- Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 16%, Op = 26%, rf = 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 6%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk- free asset? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Risky portfolio Risk-free asset b. What will be the standard deviation of the rate of return on her portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation % % O First client O Second client % c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse?Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 11%, op = 12%, rf =,2%. Required: a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 7%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? b. What will be the standard deviation of the rate of return on her portfolio? c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 17%. Which client is more risk averse? Complete this question by entering your answers in the tabs below. Required A Required B Required C Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 7%. What proportion should she invest in the…he risk free rate is 3%. The optimal risky portfolio has an expected return of 9% and standarddeviation of 20%. (a) Assume the utility function of an investor is U = E(r) − 0.5Aσ2. What is condition ofA to make the investors prefer the optimal risky portfolio than the risk free asset? (b) Assume the utility function of an investor is U = E(r) − 2.5σ2. What is the expectedreturn and standard deviation of the investor’s optimal complete portfolio?